Role and Responsibilities of Business Economist
Business Economics / Business Decision
Business Economics or decision is concerned with those aspects of economics and its tools of analysis which are used in process of decision making of business enterprise. The term Business Economics’ has been defined as under-
Spencer and Biegelman, “Business, Economics is the integration of economics theory with business practice for the purpose of facilities decision-making and forward planning of management.”
According to Mc Nair and Meriam, “Business Economics consists of the use of economic modes of thought to analysis Business situations.”
Joel Dean, “Use of economic analysis in formulating policies is known as business economics.”
Who is Business Economist?
One of the important objects of management is to identify the factors which influence business firm. The person responsible for assisting top management in this task is called business economist. Business economist helps the management in arriving at sound business decisions. He is known as a Management Economist and Economic Advisor also. He helps the top management in analysis all the internal and external factors so that sound business decisions may be taken.
Role and Responsibilities of Business Economist
Business economist studies and analyses all the internal and external factors that may influence the activities of a firm so that the uncertainties may be predicted, and business risks may be minimised. These factors may be divided into parts as follows-
(I) Internal Factors –
Internal factors affecting managerial decisions are the factors over which lie within the scope and operation of a firm, such as-determination of price policy, decision of contraction on expansion, determination of the level of efficiency, determination of wage policy etc.
Business economists can advise management on the following questions related with internal factors-
- What should be the sales budget for next year?
- What should be the policy regarding inventory for next year?
- What should be the production schedule for next year?
- What changes should be introduced in pricing policy?
- What should be the wage policy for next year?
- What types of changes are required in the credit policy of the enterprise?
- What should be the policy regarding cash for next year?
(II) External Factor’s
External factors are the factors over which the management has no control. These factors relate to the business environment in which a firm has to operate such as Business policy of the Government situation of inflation or deflation, labour law. Government controls, competition, cyclical fluctuations etc. Business Economist has to keep himself in constant touch with these factors so that he may assist top management in the process of decision making. He can advise top management on the following problems related with external factors-
- What changes have taken place in the economic policies of the Government and what more changes are expected in the near future in this field?
- What fluctuations are expected in national economy in future?
- What are the expectations of demand?
- What changes are expected to take place in the price of raw materials in the coming period?
- What is the outlook of national economy for coming year that may affect the activities of the firm?
- What is the outlook of the credit policy of financial institutions in future?
- What is the outlook of taxation policy, foreign trade policy and industrial policy of the Government?
- What is the outlook of market-and customer outlook during coming period?
(III) Responsibilities of Business Economists
The responsibilities can be explained as under-
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To Search the Measures for Increase in the Earning Capacity Firm-
Every business firm has an object of earning maximum profit Business economists have to play an important role in the achievement of these objects. He should continue his efforts in increasing the earning capacity of his firm.
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To Make Successful Forecasting-
Success of every business firm is largely determined by the degree of accuracy and correctness of the factors. A business economist is responsible for making successful forecasts by analysing internal and external factors- he must make his best efforts to minimize the uncertainties of future.
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To Contact the Sources of Economic Information and Experts-
A business economist is responsible for providing so that the plans and programmes of the firm may be checked out. He should establish contacts with the entire possible source from where he can collect the information relevant for his firm.
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To Information Possible Economic Trends-
A business economist should keep himself in touch with the latest developments of national economy and business environment so that he can get the management familiar with these developments and expected trends of economy.
Important links
- Strategic Management- Meaning, Concept & Objectives
- Features of Strategic Management- 8 Important Features
- Nature of Strategic Management & Its Importance
- Limitations of Strategic Management
- Reasons for Failure of Strategic Management
- Models of Strategic Decision Making
- Strategic Business Unit (SBU)- Success Factors, & Features etc.
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